B-139598, B-139994, B-114365, AUG 4, 1960

B-139598, B-139994, B-114365, AUG 4, 1960

SUBJECT: LOSS OF, OR DAMAGE TO, SHIPMENTS BY OCEAN CARRIERS AND INTERNATIONAL SHIPMENTS BY AIR-PROCEDURES FOR PROCESSING CLAIMS OF OCEAN AND AIR CARRIERS ON WHICH RECOVERY COULD NOT BE HAD IN COURTS BECAUSE OF STATUTORY PERIODS OF LIMITATION APPLICABLE TO COURT ACTIONS.

TO HEADS OF DEPARTMENTS, INDEPENDENT ESTABLISHMENTS, AND OTHERS CONCERNED:

SUIT TO RECOVER FOR LOSS OR DAMAGE TO GOVERNMENT CARGO TRANSPORTED BY AN OCEAN CARRIER OR AN AN INTERNATIONAL AIR FLIGHT MUST BE INSTITUTED WITHIN THE LIMITATION PERIOD, IF ANY, SPECIFIED BY THE BILL OF LADING OR OTHER CONTRACT OF CARRIAGE OR BY LAW. UNILATERAL WITHHOLDING AND OFFSETTING THE AMOUNT OF THE CLAIM FROM MONEY OTHERWISE DUE TO DEBTOR FROM THE GOVERNMENT DOES NOT STOP THE RUNNING OF THE APPLICABLE LIMITATION PERIOD NOR CONSTITUTE AN EFFECTIVE COLLECTION OF THE CLAIM. FAILURE TO BRING TIMELY SUIT WILL ORDINARILY DESTROY THE GOVERNMENT'S RIGHT TO RECOVER IN A COURT ACTION WHILE LEAVING THE GOVERNMENT STILL OBLIGED TO REFUND ANY AMOUNT WITHHELD.

FEDERAL COURTS HAVE HELD (UNITED STATES V. SOUTH STAR, 210 F. 2D 44; GRACE LINE, INC. V. UNITED STATES, 255 F. 2D 810) THAT UNILATERAL OFFSETTING FROM MONEYS OTHERWISE OWING BY THE UNITED STATES DOES NOT EXTEND THE GOVERNMENT'S TIME FOR FILING SUIT WHERE THE OCEAN BILLS OF LADING STATED THAT "THE CARRIER SHALL BE DISCHARGED FROM ALL LIABILITY IN RESPECT OF *** EVERY CLAIM WHATSOEVER WITH RESPECT TO THE GOODS UNLESS SUIT IS BROUGHT WITHIN ONE YEAR AFTER DELIVERY OF THE GOODS OR THE DATE WHEN THE GOODS SHOULD HAVE BEEN DELIVERED, "OR WHERE BILL OF LADING INCORPORATED BY REFERENCE THE SIMILAR ONE-YEAR TIME BAR CONTAINED IN THE CARRIAGE OF GOODS BY SEA ACT (46 U.S.C. 1301, 1303 (6)). SIMILARLY, THE COURT OF CLAIMS HAS HELD (FLYING TIGER LINE, INC. V. UNITED STATES, 170 F. SUPP. 422) THAT SUCH ATTEMPTED "COLLECTION BY SETOFF" FROM AN AMOUNT OTHERWISE DUE AN INTERNATIONAL CARRIER BY AIR CANNOT BE REGARDED AS THE SUBSTANTIAL EQUIVALENT OF BRINGING SUIT WITHIN THE TWO-YEAR PERIOD PRESCRIBED BY ARTICLE 29 OF THE WARSAW CONVENTION (49 STAT. 3000). THAT COURT HELD THAT FAILURE TO FILE THE REQUIRED SUIT WITHIN THE TWO-YEAR PERIOD EXTINGUISHED THE GOVERNMENT CLAIM.

A FURTHER RESTRICTION UPON THE COLLECTION OF GOVERNMENT CARGO CLAIMS HAS BEEN NOTED BY THE SUPREME COURT OF THE UNITED STATES. THAT COURT HAS HELD (ISTHMIAN S.S. CO. V. UNITED STATES, 359 U.S. 314) IN EFFECT THAT THE INDEBTEDNESS TO THE UNITED STATES OF OCEAN CARRIERS MAY NOT BE COLLECTED BY OFFSET IN MAKING PAYMENT TO THE CARRIER FOR MARITIME SERVICES OTHER THAT THOSE IN CONNECTION WITH THE IDENTICAL BILL OF LADING CONTRACT FROM WHICH THE GOVERNMENT'S CLAIM AROSE.

IN VIEW OF THE FOREGOING COURT DECISIONS, IT IS IMPERATIVE THAT GOVERNMENT CARGO CLAIMS ARISING FROM OCEAN OR INTERNATIONAL AIR SHIPMENTS BE PLACED IN SUIT AS QUICKLY AS POSSIBLE. ACCORDINGLY, IN MAKING PAYMENT HEREAFTER OF TRANSPORTATION BILLS FOR SHIPPING OR OTHER RELATED SERVICES OF OCEAN CARRIERS OR FOR INTERNATIONAL SHIPMENTS BY AIR IN CONNECTION WITH WHICH THE GOVERNMENT HAS SUSTAINED LOSS OR DAMAGE, UNLESS THE CARRIER VOLUNTARILY PAYS THE CLAIM OR CONSENTS IN WRITING TO A SETOFF FROM ANY OTHER PAYMENT, AN AMOUNT AMPLY SUFFICIENT TO COVER THE GOVERNMENT CLAIM ON THAT PARTICULAR SHIPMENT SHOULD BE WITHHELD FROM THE PAYMENT INVOLVED. ADDITION, A COPY OF THE VOUCHER COVERING THE PAYMENT, TOGETHER WITH A REPORT OF THE PARTICULARS OF THE GOVERNMENT CLAIM (INCLUDING EVIDENCE IN SUPPORT THEREOF), SHOULD BE SUBMITTED IMMEDIATELY TO THE TRANSPORTATION DIVISION, GENERAL ACCOUNTING OFFICE, SO THAT A TIMELY SUIT MAY BE INSTITUTED, TO REDUCE THE GOVERNMENT'S CLAIM TO JUDGMENT, WHERE APPROPRIATE, AND OBVIATE CONTENTIONS THAT IT IS EXTINGUISHED BY PASSAGE OF THE PERIOD OF LIMITATIONS.

IN ADMINISTRATIVELY PAYING OCEAN FREIGHT BILLS, NO OFFSET SHOULD BE MADE OR AMOUNTS WITHHELD FOR LOSS OR DAMAGE CLAIMS ARISING OUT OF SEPARATE AND UNRELATED TRANSACTIONS OF THE SAME PARTIES. ANY SUCH UNADJUSTED CLAIM, THE AMOUNT OF WHICH WAS NOT WITHHELD FROM THE FREIGHT DUE ON THE PARTICULAR SHIPMENT, LIKEWISE SHOULD BE REPORTED PROMPTLY TO THE TRANSPORTATION DIVISION, TOGETHER WITH EVIDENCE IN SUPPORT OF THE CLAIM, FOR SUCH ADJUSTMENT ACTION AS MAY BE PRACTICABLE UNDER THE COURT DECISIONS REFERRED TO ABOVE.

IN ORDER THAT SUIT, WHERE APPROPRIATE, MAY BE FILED WITHIN THE APPLICABLE PERIOD OF LIMITATIONS AND THUS OBVIATE THE LIMITATIONS PERIOD BEING RAISED AS A DEFENSE, ALL UNADJUSTED LOSS AND DAMAGE CLAIMS IN FAVOR OF THE GOVERNMENT, AGAINST OCEAN CARRIERS AND INTERNATIONAL CARRIERS BY AIR, SHOULD BE REPORTED TO THE TRANSPORTATION DIVISION, GENERAL ACCOUNTING OFFICE, WITHIN SIX MONTHS AFTER DELIVERY OF THE GOODS OR THE DATE WHEN THE GOODS SHOULD HAVE BEEN DELIVERED, REGARDLESS OF THE STATUS OF ANY NEGOTIATIONS WITH THE CARRIER.

MOREOVER, TO PERMIT CONSIDERATION OF THE APPLICATION OF "TIME BARRED" GOVERNMENT LOSS AND DAMAGE CLAIMS AGAINST SIMILARLY TIME BARRED CLAIMS OF CARRIERS, NO PAYMENTS SHOULD BE MADE ADMINISTRATIVELY OF ANY CLAIM IN FAVOR OF AN OCEAN CARRIER WITH REGARD TO WHICH IT COULD NOT RECOVER IN A COURT ACTION BECAUSE OF THE TWO-YEAR STATUTE OF LIMITATIONS FOR MARITIME CLAIMS AGAINST THE GOVERNMENT IN 46 U.S.C. 745 OR THE SIX-YEAR STATUTE OF LIMITATIONS ON OTHER CLAIMS IN 26 U.S.C. 2401. SUCH CLAIMS SHOULD BE FORWARDED TO THE GENERAL ACCOUNTING OFFICE, TRANSPORTATION DIVISION, FOR DIRECT SETTLEMENT, TOGETHER WITH AN APPROPRIATE ADMINISTRATIVE REPORT. ANY CASE WHERE DOUBT EXISTS AS TO WHETHER AN OCEAN CARRIER'S CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS CITED ABOVE, THE CLAIM SHOULD BE FORWARDED TO THE TRANSPORTATION DIVISION FOR SETTLEMENT.

THIS MATTER IS BROUGHT TO YOUR ATTENTION IN ORDER THAT TIMELY ACTION MAY BE TAKEN TO PROTECT THE INTERESTS OF THE UNITED STATES.

YOUR COOPERATION WILL BE APPRECIATED.